SP Angel Morning View -Today’s Market View, Wednesday 27th December 2023

Iron ore pushes higher as steelmakers restock before Lunar New Year

MiFID II exempt information – see disclaimer below

Horizonte Minerals (HZM LN) – $20m interim funding secured from key backers

OreCorp (ORR AU) – Renewed takeover bid from Silvercorp

Gold prices climb again as dollar continues to weaken on cooling inflation

• Spot gold prices are hovering around $2,070/oz, the all-time high reached in November.
• The move follows a continued decline in the dollar against a basket of currencies, with the index sitting a 101.45, the lowest since August.
• PCE inflation released last week showed prices continued to slow to a 2.6% rise yoy, nearing the Fed’s target.
• Traders are now pricing in an 80% chance of a Fed cut by March, weighing on US Treasury yields.
• The 10-year is holding below 3.9%, with lower real yields (factoring in inflation) typically inversely correlated to gold prices.

Iron ore pushes higher as steelmakers restock before Lunar New Year

• Dalian iron ore futures hit $137/t whilst Singapore futures up to $138.7/t.
• The benchmark 62% Fe index is holding above $135/t.
• Steelmakers traditionally restock through to China Lunar New Year in February, although November/December this year has been an unusually strong pricing environment.
• China is ramping up purchases of coal from Mongolia, which have risen 37% from last year.
• HRC export prices in China are holding around the $600/t mark whilst CRC prices are also steady at c.$660/t. Both remain well below March highs, however.

Cochilco sees slide in mining investments in Chile to $66bn from $74bn by 2032

• 49 projects in Chile are expected to see $65bn in investments for copper between 2023-2032.
• This has fallen from last year’s $74bn estimate which included 53 projects.
• Excluding copper, investments in gold, iron ore and lithium primarily are expected to see $8.4bn in investments.

Economics

Currencies

US$1.1046/eur vs 1.1007/eur previous. Yen 142.63/$ vs 142.31/$. SAr 18.575/$ vs 18.414/$. $1.270/gbp vs $1.270/gbp. 0.683/aud vs 0.678/aud. CNY 7.145/$ vs 7.138/$.

Dollar Index 101.45 vs 101.77 previous.

Commodity News

Precious metals:

Gold US$2,068/oz vs US$2,050/oz previous

Gold ETFs 85.4moz vs 85.4moz previous

Platinum US$998/oz vs US$970/oz previous

Palladium US$1,198/oz vs US$1,214/oz previous

Silver US$24/oz vs US$24.47/oz previous

Rhodium US$4,425/oz vs US$4,425/oz previous

Base metals:

Copper US$8,611/t vs US$8,626/t previous

Aluminium US$2,341/t vs US$2,290/t previous

Nickel US$16,926/t vs US$16,985/t previous

Zinc US$2,635/t vs US$2,584/t previous

Lead US$2,077/t vs US$2,071/t previous

Tin US$24,866/t vs US$25,105/t previous 

Energy:

Oil US$80.8/bbl vs US$80.2/bbl previous

Natural Gas €34.6/MWh vs €34.6/MWh previous

Uranium UXC US$86.35/lb vs US$82.30/lb previous

Bulk:

Iron Ore 62% Fe Spot (cfr Tianjin) US$135.8/t vs US$135.5/t

Chinese steel rebar 25mm US$580.7/t vs US$580.6/t

Thermal coal (1st year forward cif ARA) US$99.8/t vs US$99.8/t

Thermal coal swap Australia FOB US$138.5/t vs US$138.5/t

Coking coal swap Australia FOB US$322.0/t vs US$322.0/t

Other:

Cobalt LME 3m US$29,135/t vs US$29,135/t

NdPr Rare Earth Oxide (China) US$61,641/t vs US$61,574/t

Lithium carbonate 99% (China) US$12,118/t vs US$12,105/t

China Spodumene Li2O 6%min CIF US$1,340/t vs US$1,340/t

Ferro-Manganese European Mn78% min US$1,062/t vs US$1,057/t

China Tungsten APT 88.5% FOB US$305/mtu vs US$305/mtu

China Graphite Flake -194 FOB US$610/t vs US$610/t

Europe Vanadium Pentoxide 98% 6.1/lb vs US$6.1/lb

Europe Ferro-Vanadium 80% 26.25/kg vs US$26.25/kg

China Ilmenite Concentrate TiO2 US$316/t vs US$316/t

Spot CO2 Emissions EUA Price US$75.8/t vs US$75.4/t

Brazil Potash CFR Granular Spot US$310.0/t vs US$310.0/t

Company News

Horizonte Minerals (HZM LN) 9.3p, Mkt Cap £24m – Interim funding secured from key backers

• Horizonte announces today it has agreed a US$20m interim funding package with Orion, Glencore and La Mancha.
• The funding is comprised of a US$15m Senior Secured Loan Facility and the release of US$5m by OMF Fund III (Orion Mine Finance).
• The facility will mature 102 months from the 7^th December 2022 and bear interest at 15% pa.
• The financing will enable Horizonte to continue ‘critical construction streams’ at Araguaia alongside ‘general working capital.’
• These critical workstreams ae the Water Storage Reservoir and the 230kV powerline.
• Full funding discussions are ongoing with Horizonte’s main backers, with the due diligence period expected to be completed in 1Q24.

OreCorp (ORR AU) A$0.58, Mkt cap A$270m – Renewed takeover bid from Silvercorp

• OreCorp announced today that SilverCorp Metals has submitted a revised offer for the Company.
• The offer for the remaining shares in OreCorp not owned by Silvercorp stands at:
  • A$0.19 in cash and 0.967 Silvercorp shares for each OreCorp share.
• The offer reflects an implied value of A$0.589/share and a 22% premium to the Company’s 20-day VWAP to 22^nd December.
• The deal has shifted from a scheme of arrangement to an off-market takeover, which requires Silvercorp to acquire 50.1% of the Company and 90% of the outstanding shares.
• The OreCorp board has recommended shareholders to accept the offer.
• OreCorp holds the Nyanzaga Gold Project in Tanzania, whose DFS highlights:
  • 40mt @ 2g/t Au for 2.6moz Au in reserves.
  • Peak gold production of 295koz/pa over a LOM of 10.7 years averaging 234koz/pa.
  • AISC of US$954/oz and pre-production CAPEX of US$474m for a post tax NPV5 of $618m and an IRR of 31% at a gold price of US$1,750/oz.
• Perseus Mining recently acquired a 19.9% holding in the Company as they look to add reserves to their African gold portfolio.
• Perseus holds c.$900m in cash and liquidity but has stated it is not looking to acquire the entire Company.

No.1 in Copper:  “The winner of the 2020 Fastmarkets Apex contest for copper was the team at SP Angel comprising John Meyer, Sergey Raevskiy and Simon Beardsmore, with an accuracy score of 93.8%”

No1. In Gold:  “SP Angel’s trio took the top spot for the gold price prediction throughout the year, with an accuracy score of 97.59%”

The SP Angel team also ranked 1st in Palladium, 3rd in Tin and 5th in Silver in the fourth quarter of 2020

Analysts

John Meyer – John.Meyer@spangel.co.uk – 0203 470 0490

Simon Beardsmore – Simon.Beardsmore@spangel.co.uk – 0203 470 0484

Sergey Raevskiy –Sergey.Raevskiy@spangel.co.uk – 0203 470 0474

Sales

Richard Parlons –Richard.Parlons@spangel.co.uk – 0203 470 0472

Abigail Wayne – Abigail.Wayne@spangel.co.uk – 0203 470 0534

Rob Rees – Rob.Rees@spangel.co.uk – 0203 470 0535

Grant Barker – Grant.Barker@spangel.co.uk – 0203 470 0471

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